Hi all, In the placement process for Wells Fargo and I was curious if anyone had any insights on leveraged finance versus leveraged underwriting (either at the bank or just in general). I know that underwriting just got moved over from the corporate banking side... how do the 2 compare in terms of interesting work, prestige, exits, etc.? Thanks!
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Based on the most helpful WSO content, Leveraged Finance (LevFin) and Leveraged Underwriting both have their unique aspects and opportunities.
LevFin is primarily involved in originating and dealing with performing credits that are pretty down the fairway for most institutional term loan / high yield buyers. The group is transaction and fee focused, and much of the credit risk is being distributed to investors vs. being held on balance sheet. In a downturn, there might not be a need for such a large LevFin workforce, unlike credit underwriting.
On the other hand, the process of underwriting a loan as a direct lender will likely be similar to the process within a banks’ leveraged finance team. This includes receiving an inbound from a sponsor about an opportunity they’re looking at, signing the NDA and getting the CIM, providing preliminary financing views, receiving a grid from the sponsor and if you move forward, then you receive due diligence and negotiate term sheets, commitment papers and ultimately the facilities agreement.
In terms of exit opportunities, the credit documentation skills that you pick up in leveraged finance will likely be transferable to those required in direct lending. There is still an origination element involved in direct lending, with sponsor relationships being a key differentiator.
Remember, the choice between the two would depend on your career goals, interests, and the kind of work you find fulfilling.
Sources: Leveraged Finance – 2017 Update, Overview of Leveraged Finance, Joining LevFin and FSG at this point in the cycle
Imo underwriting would give you a better technical skillset since you’re understanding the docs.
Not super familiar with WF levfin group but other BBs the levfin team is essentially just making decks for marketing.
Yup... you'll make more (and work more) in LevFin but the LevFin underwriting team's work is more interesting, better hours, but less comp.
What other banks on the street house the underwriting team under levfin?
Leveraged underwriting is a sub group within leveraged finance comprised of corporate bankers. They are responsible for getting internal credit approval for underwritten leveraged finance deals.
Most large IBanks have leveraged credit or leveraged portfolio management teams that support leveraged finance. Work is the same as corporate banking portfolio management, but only for LBO or acquisition financings.
Is Levfin Underwriting paid as IB level? Or similar to CB level?
CB
This is wrong - Base is the same as IB
FYI Levfin team doesn’t model whatsoever at WF. If you want to model and get an overall better technical experience go for the underwriting team
Hours can be brutal since you are on sponsor timelines.
Does Citi have a similar group? If so, what is it called?
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